What are fair managed account terms? | Forex Factory

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What are fair managed account terms?

  • #1
  • First Post: Sep 7, 2011 10:40pm Sep 7, 2011 10:40pm
What do you think is fair for a client to be charged for a managed account per profitable month?
  • #2
  • Sep 7, 2011 10:50pm Sep 7, 2011 10:50pm
Quoting Dale
What do you think is fair for a client to be charged for a managed account per profitable month?
what happens if he loses your funds, will he pay you back?
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  • #3
  • Sep 7, 2011 10:59pm Sep 7, 2011 10:59pm
He will stop trading if there is a 50% drawdown and will not pay back
  • #4
  • Sep 7, 2011 11:01pm Sep 7, 2011 11:01pm
25-35% seems to be a common figure
  • #5
  • Sep 7, 2011 11:01pm Sep 7, 2011 11:01pm
Quoting Dale
He will stop trading if there is a 50% drawdown and will not pay back

sounds like a shitty deal
makes money off of you, at zero risk to him, i would tell him to go suck a lemon
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  • #6
  • Sep 7, 2011 11:05pm Sep 7, 2011 11:05pm
If he makes money the client makes more, right? If he doesnt trade well he doesnt get paid


Quoting the redlion
sounds like a shitty deal
makes money off of you, at zero risk to him, i would tell him to go suck a lemon
  • #7
  • Sep 7, 2011 11:13pm Sep 7, 2011 11:13pm
he doesnt trade well the client takes it in the ass.

people that let other people handle their money, might as well wipe their ass with it.

loss to the client, a profit to him at no risk.

the client is at the mercy of an a hole, will get commissions by risking the clients money. sounds like a bad deal to me.

hey i can trade your account at 50 drawdown i ll stop trading and say sorry the market was rough.
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  • #8
  • Sep 7, 2011 11:18pm Sep 7, 2011 11:18pm
Quoting the redlion
sounds like a shitty deal
makes money off of you, at zero risk to him, i would tell him to go suck a lemon
A good money manager will never pay back any loss. It's more than fair to waive fees in the event of loss. In alot of cases managers still charge commission on loss. If a manager loses over a prolonged period, I think it may be in their best interest to lower their commissions (or waive fees). It is the investors responsibilty to research the money manager as best as possible and to determine how much to invest with him/her. There are two ways a manager can collect. They can retain a portion of the profits - such as 25-33% for example. Or they can guarantee a monthly return, like 2%, and pocket any difference of overperformance.
  • #9
  • Sep 7, 2011 11:20pm Sep 7, 2011 11:20pm
Quoting the redlion
he doesnt trade well the client takes it in the ass.

people that let other people handle their money, might as well wipe their ass with it.

loss to the client, a profit to him at no risk.

the client is at the mercy of an a hole, will get commissions by risking the clients money. sounds like a bad deal to me.

hey i can trade your account at 50 drawdown i ll stop trading and say sorry the market was rough.
The money manager is supposed to be the professional. A professional with superior experience than the investor. Most investors worked a job unrelated to financials or investing. Now they want their savings to make money. Would you go to your accountant for a surgey? There are many cases where the investor-manager relationship is beneficial for both.
  • #10
  • Sep 7, 2011 11:20pm Sep 7, 2011 11:20pm
sounds like someone took it in the ass...

Quoting the redlion
he doesnt trade well the client takes it in the ass.

people that let other people handle their money, might as well wipe their ass with it.

loss to the client, a profit to him at no risk.

the client is at the mercy of an a hole, will get commissions by risking the clients money. sounds like a bad deal to me.

hey i can trade your account at 50 drawdown i ll stop trading and say sorry the market was rough.
  • #11
  • Sep 7, 2011 11:38pm Sep 7, 2011 11:38pm
never have......

a professional that at the end knows nothing about the market, economists are always wrong, and i bet you those professionals know as much as i do where the market will be tomorrow.......i really dont know.

anyway my point is giving your money away to some guy to trade it for you, you might as well wipe your ass with it.

look at other venues, other than forex, or learn to trade, if you blow up your savings at least it was you.

how many PROFESSIONALS beat the S&P?
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  • #12
  • Sep 7, 2011 11:50pm Sep 7, 2011 11:50pm
Paul Tudor Jones II,

His management company charges the hedge funds he manages a fee that is higher than the industry standards. The industry standards are two percent per annum of assets under management and twenty percent of the profits, whereas Tudor Investment Corp. charges four percent per annum of assets under management and twenty-three percent of the profits.

From Wikipedia
  • #13
  • Sep 7, 2011 11:52pm Sep 7, 2011 11:52pm
I think it all depends on the performance. But any where between 35% and 40% is fair.
  • #14
  • Sep 7, 2011 11:54pm Sep 7, 2011 11:54pm
do a search about published studies, about hedge funds, and managed accounts as well as mutual funds, over a ten year period.

these shining young cocky guys, and their returns are pure luck.

My Hats off to buffet.

no on will manage your money better than you
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  • #15
  • Sep 8, 2011 12:05am Sep 8, 2011 12:05am
Quoting the redlion
never have......

a professional that at the end knows nothing about the market, economists are always wrong, and i bet you those professionals know as much as i do where the market will be tomorrow.......i really dont know.

anyway my point is giving your money away to some guy to trade it for you, you might as well wipe your ass with it.

look at other venues, other than forex, or learn to trade, if you blow up your savings at least it was you.

how many PROFESSIONALS beat the S&P?
I couldn't disagree more. I personally know a money manager who is great at what he does. He has told me in conversations that he speaks with other money managers on a weekly basis. Other money managers that are all very skillful in what they do. Obviously they are skillful or they wouldn't exchange information with each other. This may surprise you (going by what you've said), but these managers are very good at assessing opportunities and managing risk exposure.

Sure you have all kinds of "bad" managers out there. Just like you have bad bankers, mortgage brokers, police officers, teachers, etc. There are con artists and incompetents in every major profession. That is why one must research a managers history, past performance, education, etc.

BTW, what was the purpose of starting this thread?? I was under the impression that you wanted answers to your question... 'What is fair compensation for managed accounts'. Apparently I was mistaken since all that has been done is bash money managers. I hate to say it, but you do sound like someone that was taken advantage of. I'm sorry if you had a bad experience.

Quoting the redlion
no on will manage your money better than you
I'm willing to bet there are managers that will easily outperform you. It just seems like you have an issue with trust. That's it from me.
  • #16
  • Sep 8, 2011 12:10am Sep 8, 2011 12:10am
Quoting 2+2=4ex
I couldn't disagree more. I personally know a money manager who is great at what he does. He has told me in conversations that he speaks with other money managers on a weekly basis. Other money managers that are all very skillful in what they do. Obviously they are skillful or they wouldn't exchange information with each other. This may surprise you (going by what you've said), but these managers are very good at assessing opportunities and managing risk exposure.

Sure you have all kinds of "bad" managers out there. Just like you have bad...

lol i manage my own funds, im pretty good at assessing my own risks and opportunities. i maintain my position, no one can manage your money better than you can.
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  • #17
  • Sep 8, 2011 12:10am Sep 8, 2011 12:10am
Yes is was interesting how the thread got off topic so quickly, Thankyou for all your posts.
  • #18
  • Sep 8, 2011 12:21am Sep 8, 2011 12:21am
Quoting Dale
Yes is was interesting how the thread got off topic so quickly, Thankyou for all your posts.
My apologies, I thought redlion started the thread. In any case, I can see someone feeling more comfortable managing their own money. I respect that decision - especially if they are profitable. However, to make a blanket statement that no manager is worth paying for their services is totally incorrect. There are many investors that cannot turn a profit on their own. In this case, a skilled and reputable manager who does make profit is worth investing with. That is my opinion.

As for how much to pay them? I really don't know what the industry standard is, but I'm sure others here do.
  • #19
  • Sep 8, 2011 1:26am Sep 8, 2011 1:26am
Also consider using a high-water mark. (see e.g. http://www.investopedia.com/terms/h/...#axzz1XL7WwJBA)
The nail that sticks out gets hammered back in
  • #20
  • Last Post: Sep 8, 2011 2:05am Sep 8, 2011 2:05am
A performance fee minimum in the industry seems to be 20%. That's 20% to the funds manager on any profits, high water mark adjusted monthly or quarterly or whatever.

I have heard of people paying up to 50% to small fund managers who produce consistently high returns. If your manager is producing anything better than 40%/year and can do so consistently then he would be likely to be able to command such a fee....

The "management fee" of 2% per year is common in the hedge fund industry - this is where many funds actually make money. When you consider that large hedge funds may be considered high-performimg if they return 15% per annum, then that 20% performance take on a 15% annual return is equivalent to a 3% take on all assets - so the management fee might be as much or better than a profitable firm's performance take.

But for small money managers I don't see the point of a "management fee" at all, especially if they are asking for >20% performance fees, unless they have a really low entry point into the fund...
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